Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
When making a decision one has to consider the effect of his or her decision to the partner. This is common in the Perfect competition -- pure market phenomenon.
With the assumptions above the game theory helps in developing a perfect competition among the consumers.
Goal theory in perfect competition market
It tends to describe market structure based on assumptions which are non-existent, most market systems are imperfect, however the long run and short run situations can help in holding the assumption to be true based on the equilibrium, price and output.
Basic assumptions required for conditions of pure competition to exist as below;
Many small firms: Each producer producing a significant percentage in the total output in the market hence has no ruling in the market prices.
Many individual buyers, there exists no monopoly power: Perfect freedom of entry and exit by the firms with the application of the game theory it ensures that all firms attain maximum required profits in the long run.
Homogeneous products: these are similar product in the market and with the application of the game theory there can be coming up of perfect substitute products hence one firm winning advantage over the other.
Monopolistic market structure: In the game theory an individual participates directly in a market system in management of the firm and the decisions of the firm on price determination and production hence the advantage of the other. In order to maximize...
Monophony.
This is the market structure where the consumption is done by only single consumer the game theory then will allow the upcoming of another consumer thus leading to consumption competition in the market.
Conclusion
The Game theory in the market trends ideally deals with trying to accurately predict the outcome of the strategy game in a market place where the participants don't have any information about the intentions or the moves of the other individual or market player. The game theory also has a small number of players such that the decision of one player can change or determine the direction of the market trend and the price in the markets as indicated above.
References
David K.L., (2011). Economic and Game Theory, what is Game Theory. Retrieved April
21, 2011 from http://levine.sscnet.ucla.edu/general/whatis.htm
Geoff R., (2006). Perfect Competition. Retrieved April 21, 2011 from http://tutor2u.net/economics/revision-notes/a2-micro-perfect-competition.htm
Theodore L.T. & Bernhard S., (2001). Game Theory. Texas a&M University, London School of Economics, DAM Research Report LSE-CDAM-2001-09 Retrieved April 21, 2011 from http://www.cdam.lse.ac.uk/Reports/Files/cdam-2001-09.pdf
Game theory is a concept that entails formal study of cooperation, conflict and actions taken up by several interdependent agents. Game theory as a concept lays down the structure that facilitates through analysis an understanding of the strategic choices agents adopt[footnoteRef:1]. The earliest conceptualization of game theory is by Cournot in 1838 where the analysis sought to clarify choices and actions taken in a duopolistic market [footnoteRef:2]. Over the years,
In actuality, the competition became quite stiff between various sales staff as it was the sales leaders in each category that were to receive bonuses, rather then incentives being given to all staff that reached certain targets. This meant that it was in each sales person's best individual interests to hinder sales from others and compete for certain specific sales. The ultimate result was a more embittered workforce and a
Game Theory and Equilibrium Outcomes QuickMBA (2010) states, "Game theory analyzes strategic interactions in which the outcome of one's choices depends upon the choices of others. For a situation to be considered a game, there must be at least two rational players who take into account one another's actions when formulating their own strategies." Assuming fair competition and antitrust laws are upheld, GE could follow a specific framework or actionable approach
Game theory is a critical form of decision making that is used in various subjects like economy and political science. Its relevance is becoming prominent in the success rates that have come out in gambling and sports betting. The theory is basically an amalgamation of different models of cooperation and conflict between various decision makers (Myerson, 1991) Thus, it can be safely stated that the theory itself is not just
The Versatility of Applied Game Theory Applied game theory is an intricate subject that touches upon the strategic interactions amongst rational decision-makers. It has evolved as a powerful tool not just within economics, but across a diverse range of disciplines including political science, biology, computer science, and psychology. By applying game theory, one can forecast the outcomes of competitive situations and make better strategic choices by considering the potential decisions of
market structures in detail and analyses the pricing strategies that the firms have to undertake when they operate in different regimes. The case study on Toyota is considered next, which indicates that firms competing in various structures does not only have to focus on price and quantity ceteris paribus, they also have to consider external and internal variables that have a bearing on these decisions. Introduction to Market Structures Market structures